Another Labour policy is about to perform a beautiful boomerang of a u-turn. Religious schools, whose "ethos and success" David Blunkett famously yearned to bottle, have become a serious embarrassment. Since he first proposed a huge expansion of faith schools, much has happened. Downing Street still sounds pious, but the education department sounds a lot less so. There will be considerably fewer new religious schools than previously threatened. The Church of England's bold bid for 100 more secondary schools now looks more like three or four, at most.

What has changed? A new education minister cast a colder eye on religious schools even before the calamitous riots in Oldham and Bradford. Shocking scenes in Ardoyne with Catholic girls spat at by Protestant parents showed the worst face of apartheid schools. After September 11 the hot breath of religious passion made that special ethos look more sinister. From many quarters now comes the sound of screeching brakes on a policy that threatens to divide by race and religion. This week saw the final date for responses to the education white paper: it has provoked a great weight of new evidence against religious schools from educationalists alongside a detailed rebuttal by the National Secular Society.

A brief summary of the facts: at most 7% of the UK population go to church, 3% are devout Muslims or Sikhs, yet a third of all state schools are religious. Some 45% of the population has no religious belief: church schools are popular for very secular reasons. Labour has already created 13 new schools for Muslim, Jewish, Greek Orthodox and Seventh Day Adventist faiths. Some 60 are waiting in the wings.

Lord Ouseley, former head of the commission for racial equality reporting on Bradford after the riots, damned segregated schools as a prime cause of racial hatred. "There are signs that communities are fragmenting along racial, cultural and faith lines" he wrote. "Segregation in schools is one indicator of this trend." He spoke of "attitudes hardening and intolerance to differences growing". However, demand for all-Muslim schools is increasing. A new girls' Muslim state school opened in Bradford this term, despite growing concern among local councillors, whom Ouseley accused of cowardice in not confronting divisive schools. The city's education committee is frustrated at having no say in the school admissions policies of the four Catholic, two C of E and one Muslim secondary: religious schools foil all attempts at future integration.

In Oldham too religious schools cause apartheid. Grange School - 97% Asian - is a stone's throw from C of E Blue Coat school - almost entirely white. Why the segregation? Because Blue Coat, like Oldham's other C of E secondary, demands church attendance from parents with a vicar's letter to prove it. Even not very devout Muslim families are thus barred. Officially there is rejection of bussing children across race and class lines as attempted once in America, yet parents from all over Greater Manchester are happy to bus their children into Oldham's two "good" white schools.

The myth about good C of E schooling was exposed by a surprising source recently. The rightwing thinktank Civitas reports that church schools are not doing well. It means their slightly better results barely reflect their mainly far better intake. Churches eagerly deny that they select, but most do in subtle ways: they demand church attendance which screens out chaotic families, or they take down names at a young age, filled up by the most clued-up parents. Catholic schools leave some 10% of places in popular schools empty rather than let in unwashed heathens.

Canon John Hall, the C of E's education officer, was caught out by the Times Educational Supplement this week making precisely the sort of claim that deludes people about the value of church schools. He compared the high standards of St Christopher's School, Accrington, with the low standards of next door Moorhead High: "The church school regularly outperforms the community school". The TES checked and found, as ever, that the church school had only 12% special needs children while Moorhead had 69.8%. It had only 16 exclusions, compared with Moorhead's 95.

Schools can be misleadingly close but still draw very different intakes. Apparently "bad" areas can still attract middle-class families. Concerned parents will gather together under any banner that signifies a better intake and thus higher standards: religion is often that banner. Official pressure now is to stop church schools selecting. Lord Dearing himself strongly suggested that they should have a "core" of Christians and then take all-comers. But in the highly unlikely event that they prevent middle-class bias, they would become no better than other schools on present evidence.

Even if they were better, Muslims and others would shun their Christian ethos, though Muslim children might do worse in Muslim schools. The under-achievement of Bangladeshi and Pakistani children was blamed this week on the amount of time they spend in mosques studying the Koran, in a report by Dr Mohammed Ali, chief executive of a Bradford charity: "Quantity not quality is provided in most British mosques and madrasahs and that is probably one of the reasons for the poor educational performance of British Pakistani pupils." Bradford has 18 private Muslim schools that fall outside Ofsted scrutiny (though why private education is excluded from equal inspection is a mystery).

There are better solutions. Plashet girls' school in East Ham has 70% Muslim pupils (Bangladeshis and Pakistanis), 10% Hindu, 10% Sikh, 10% Christian. Bushra Nasir, its Muslim headteacher, has gone to extraordinary lengths to accommodate every religion, with separate school assemblies for each faith, a flexible uniform, religious diets and closing early for the month of Ramadan, while celebrating Diwali, Christmas and Guru Nanak's birthday. Above all she manages to allay parental fears, urging girls into higher education. Results have soared from 28% to 59% gaining five A-C grade GCSEs, with many now going to university. With great care an ordinary state school can educate girls well, with enough sensitivity to satisfy religious anxieties - better by far than segregating the faiths. There should now be a freeze on any new faith schools and a ban on any religious selection.

Given the heathen nature of Britain, religion still plays an astonishingly powerful part in educational politics, from the prime minister to his (Christian) education policy adviser and his (Christian socialist movement) schools' minister, Stephen Timms. Nonetheless, given the weight of evidence against religious schools, it looks as if the Christian soldiers may not march much further onwards.